For a man who is so keen to embody the future, Nick Clegg is finding it surprisingly hard to escape the past.

Every time the deputy prime minister enters his magnificent office overlooking Horse Guards Parade, he is greeted by artwork chosen by its last occupant, Peter Mandelson. It shows impeccable taste. But it is an ever-present reminder of a figure who embodied a political way of life that has, according to Clegg, been consigned to history after the creation of the first peacetime coalition in 70 years.

"We are living in a society where the old duopoly of the parties has broken down for good," Clegg told the Guardian. "I don't think this is a one-off accident."

The biggest moment for the Liberal Democrats in this new era of co-operative politics came this week when Clegg made a statement many in his party doubted they would hear in their lifetime: a referendum on whether to replace Britain's first-past-the-post system with the alternative vote (AV) will be held next May.

For purists who dream of full proportional representation, AV is, as Clegg said during the election, a "miserable little compromise". He admits AV falls well short of his goal of pure PR. But he holds up the referendum as a symbol of the benefits – and imperfections – of coalition government. The Lib Dems can secure change but, as the junior partner, will not achieve everything. "I am a revolutionary but I am also a pragmatist," he says.

To critics on the left, who say he has sold out his liberal principles, he says this will be the most liberal parliament in a generation. "You now have a government in a very short few weeks announce a programme for reform we have not seen in a decade or the early years of New Labour enthusiasm for reform.

"We have got a very dramatic push for rebalancing of the statute book away from state authority towards individual liberty. It has been talked about for years and now we are going to get on with it.Arguably, in my view, this is the most liberal parliament we have had in a generation or two, rebalancing the relationship between the state and the individual, defending not trashing civil liberties, political reform, internationalist in outlook, dedicated to greater green sustainability. There are really big signals."

While Clegg can reel off a list of gains, he knows the coalition has proved difficult for many Lib Dems – notably those whose idea of realigning British politics was excluding the Tories from power through greater Lib-Lab co-operation. Charles Kennedy, the former leader, is watching warily. Sir Menzies Campbell, one of the architects of the rapprochement with Labour under Tony Blair, will rebel on university tuition fees.

Clegg feels their pain. "Do I expect everyone in the Liberal Democrats to be completely content with something which is self-evidently a really big issue?" he asked. "Of course not. It would be inhuman. I run an open, raucous political party. I don't run a sect."

Clegg won unanimous support to share power with the Tories even though the Lib Dems gave ground on the defining issue of this parliament in the coalition agreement. Clegg and Vince Cable, who had warned that early action to tackle the fiscal deficit could choke off the recovery, signed up to a faster and deeper programme of cuts.

The deputy prime minister dismisses the likes of Ed Balls who say the Lib Dems are risking a return to a 1930s downturn by endorsing Tory cuts.

Senior officials, led by the Bank of England governor, Mervyn King, were clear that unless an early statement of intent was issued, the markets would target the pound. "If we didn't assert control very quickly you would have something immeasurably worse than what we are doing now," Clegg said. "Instead of a government that was accountable to the people taking difficult decisions, you'd have even more unpleasant decisions taken by people who are not accountable at all."

If the Lib Dems have moved to the right on the deficit, they have moved to the left on the NHS. Clegg had campaigned against the Tory pledge to ringfence the NHS budget so that it rises at least in line with inflation. He now admits he was wrong. "I am almost worried that people are now imagining that somehow the NHS is going to be awash with cash. It is not. This is an extraordinarily tight settlement for the NHS." The delicate work of maintaining the coalition is succeeding because both sides believe it has to work: the British people expect secure and stable government. But the coalition would crumble without the right chemistry between Clegg and David Cameron.

"We have learnt a huge amount about each other," Clegg said. "He and I literally didn't know each other at all. We have had to compress a learning exercise about government of course and about each other.What [we] have tried to do – and I hope we have set the tone for the rest of government – is to be open with each other, friendly, but very tough with each other behind closed doors when we have to, when we feel vital issues of principle and policy are at stake. But [then] be incredibly relaxed that we come at this from different points of view but with respect that we have constraints and priorities."

It sounds easy. But Clegg is used to managing a coalition. Tonight, the half-Dutch deputy prime minister will be sitting on one side of the family sofa with a Heineken, cheering on the Netherlands. On the other side his wife, Miriam, will be cheering on her native Spain with a San Miguel.